True or False: Annuities can be a beneficial tool for retirement planning.

Annuities can indeed be a beneficial tool for retirement planning as they offer a reliable income stream, which can be particularly advantageous as individuals transition from working to retirement. The primary purpose of an annuity is to provide financial security during retirement by guaranteeing periodic payments to the annuitant, either for a specified period or for the rest of their life.

This income can help manage longevity risk, which is the possibility of outliving one's savings. Annuities can also be structured in various ways to meet different financial needs, such as fixed or variable payouts, thus allowing individuals to tailor their retirement income according to their personal circumstances and goals.

For high-income individuals, there can be additional tax advantages since certain types of annuities can provide tax-deferred growth. However, this does not limit their utility solely to that demographic; individuals at various income levels can also benefit from the structured and secure income that annuities can provide.

Overall, annuities serve as an effective strategy in a diversified retirement portfolio, supporting long-term financial health and peace of mind during retirement years.